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San Beda College of Law

2010 Centralized Bar Operations

POWER OF TAXATION

DEFINITION
Taxation is an inherent power of the sovereign exercised through the legislature to impose burdens upon
subjects and objects within its jurisdiction for raising revenues to carry out the legitimate objects of the
government.

PURPOSES AND OBJECTIVES


A. Revenue to raise funds or property to enable the State to promote the general welfare and protection of its
citizens.

B. Non-Revenue (PR2EP)
1. Promotion of general welfare taxation may be used as an implement of police power in order to
promote the general welfare of the people.
2. Regulation
3. Reduction of social inequality the progressive system of taxation in the Philippines prevents the undue
concentration of wealth in the hands of few individuals. Progressivity is based on the principle that those
who are able to pay more should shoulder the bigger portion of the tax burden.
4. Encourage economic growth the grant of incentives or exemptions encourage investment.
5. Protectionism In case of foreign importations, protective tariffs and customs are imposed for the
benefit of local industries.

BASIS OF THE THEORY OF TAXATION